Defendant`s memorandum on sentencing

l
:,,-~
.
!
:./.~
I..
' _ . ,.i.
t!
. .- ...... .
'.>.
l~i::D:-;C I'LD PURSUi"d'J'
TO COj!a OHDJ::H
. ..:; .... : ..
\
\
i
.
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-------X
UNITED STATES OF AMERICA,
Plaintiff,
87 CR 378l.!lE()
-against-
IVAN F. BOESKY,
De-fendant.
- - - - - - - - - - - - - - - - - - - - - X
DEFENDANT'S MEMORANDUM ON SENTENCING
f~·.
FRIED, FRANK £ARRIS, SHRIVER &
JACOBSON
(A Partnership Including
Professional Corporations)
One New York Plaza
New York, New York
10004
(212) 820-8000
WILMER, CUTLER & PICKERING
2445 M Stree~, N.W.
Washington, D.C.
20037-1420
(202) 663-6000
Attorneys for Ivan F. Boesky
. .;
REDACTED PURSUANT
TO COURT ORDER
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
UNITED STATES OF AMERICA,
Plaintiff,
v.
IVAN F. BOESKY,
Defendant.
)
)
)
)
)
)
)
)
)
)
)
()/1( L
,
87 CR 378
DEFENDANT'S MEMORANDUM ON SENTENCING
Introduction and Summary.
Ivan F. Boesky is before the Court for sentence upon
h,is plea of guilty to an information charging that he conspired
to make false filings (Schedule 13D and amendments) with the
Securities and Exchange Commission (SEC) concerning ownership of
securities of Fischbach Corporation.
His guilty plea is a part
of his settlement with the U.S. Attorney and the SEC.
That set-
tlement includes: (1) consent to a civil injunction and an SEC
administrative order that bars him for life as a securities professional;
(2) his payment of $50 million in personal funds to an
escrow account to settle claims against him and the entities that
he managed;
(3) his payment of an additional $50 million in per-
sonal assets as a civil penalty; and (4) his cooperation with the
U.S. Attorney and the SEC, as detailed below and in the U.S.
Attorney's Sentencing Memorandum.
- 2
-~
Tbe Cour t faces a most diffi cult task.
Ivan. Boesk y has
his part in serio us misco nduct in the finan cial marin recen t
kets. This case has been the most highl y publ icize d
years . The clamo r for venge ance has been inces sant.
ack~owledged
reven ge.
Four majo r facto rs coun terba lance the calls for
Firs t, Ivan Boesk y volu ntari ly initi ated conta ct with
"the U.S. Attor ney.
He made a proff er
Boesk y subs tanti ated all parts of.h is prof fer.
d the prof In addi tion, his actua l coop erati on exten ded far beyon
es with
fered evide nce; he provi ded law enfor ceme nt auth oriti
addi tiona l infor matio n of incal culab le value .
sente ncing
nt's
As the Cour t can fairl y concl ude from the Gove rnme
memorandum, Mr. Boes ky's coop erati on is unpre ceden ted.
of a"
He revea led tpat his own misco nduct was but a part
cial mark ets.
natio nwid e cance r eatin g at our secu ritie s and finan
s that would
He enab led the Gove rnmen t to inter dict ongo ing crime
evide nce and
other wise have gone unde tecte d and unpu nishe d •. The
gh his
insig hts that law enfor ceme nt auth oriti es gaine d throu
aidin g them
coop erati on are likel y to play an impo rtant role in
- 3 -
to restore 1he integrity in our domestic and international securities markets.
Second, Mr. Boesky has already paid a devastating price
for his wrongs, irrespective of the sentence imposed by this
Court.
He has humiliated the children he nurtured and the family
he loves.
He is
perm~nently
-he devot-ed his adu-lt life.
barred from the profession to which
He has- -forfe-h-ed-v'i-rtua-lly all of the-
wealth he worked to accumulat'e-.-He-i-s mired in civil--litigation
which, even after the payment of $50 million in restitution (plus
,
,
$50 million in civil penalties), will probably bankrupt him.
He
will be a witness in civil, regulatory, criminal, and perhaps
congressional, hearings for years to come.
license from the Michigan State Bar.
He has permanently tar-
nished the public reputation he sought.
social life left.
He has forfeited his
He has no business or
He has been rejected by the charitable groups
he supported and helped to fund.
He must start life anew.
Third, Ivan Boesky is not the monster portrayed in the
press.
He has no prior record of criminal wrongdoing.
been a devoted father and family man.
He has
He has actively pursued
individual and organized charitable activities since he was a
teenager.
Over the years, he built an extraordinary record of
philanthropy for the benefit of both individuals and
organizations.
- 4 -
FEurth, Ivan Boesky is remorseful and repentant.
He
came forward long before charge, arrest or indictment to acknowledge his guilt.
He has spent countless hours cooperating with
the Government.
He used virtually all his assets to make resti-
tution to those who may be found to have been injured by his conduct.
He is obtaining psychiatric treatment and pursuing intense
religious study.
Letters from friends and relatives attes.t-to
his soul-searching reexamination of his life and his deep
remorse.
Ivan Boesky, a complex and imperfect human being,
deserves consideration for the good acts he has practiced
throughout his life.
He deserves credit for the terrible penal-
ties and humiliation. that society has already imposed and will
continue to impose for the rest of his life.
Most significantly,
he deserves this Court's recognition of the extent and vital
importance of his extraordinary voluntary cooperation with law
enforcement authorities.
Unfortunately, that cooperation fuels
society's cry for vengeance.
Retribution on the basis of
uninformed cries for vengeance and fueled by condemnation of
cooperation can only prevent others from cooperating to the detriment of our crimiDal justice system.
Many individuals who know Ivan Boesky have written
urging the Court to impose an alternative sentence involving
minimal incarceration.
We hope the Court will recognize that
-
retribution aside
-~.societal.
5 -
interests would best be served by a
mixed sentence involving a short prison term and extensive courtordered community service.
humiliated and banished.
Ivan Boesky has been publicly
He is a broken man, barred for life
from regulated securities businesses.
repetition.
deterred by
There is no prospect of
Others surely have been, and will continue to be,
th~_ignominy
of his fall.
His cooperation far sur-
passes the cooperation of others who have received mixed, alternative, or suspended sentences.
A substantial period of enforced
public service would.benefit society.
We have submitted with
this Memorandum, and summarized below for the Court's consideration, an alternative proposal for court-ordered community service, as part of a split sentence under 18 U.S.C. S 3651 (1982 &
Supp. 1985).
Under the proposal, Mr. Boesky would spend a minimum of
3,000 hours of unpaid community service over an extended period
of supervised probation at the Community Food Bank of New Jersey,
a Newark organization founded in 1980 by the Archdiocese of Newark.
The Food Bank distributes free food to approximately
100,000 disadvantaged and elderly people each month.
Mr. Boesky's principal assignment would be in the Food Bank warehouse, working with teenagers referred to the Food Bank program
from either drug and alcohol programs or community mental centers
for emotionally disturbed young adults.
Kathleen DiChiara, the
director of the program, has interviewed Mr. Boesky and agreed to
- 6 accept him jnto that program, supervise his performance, and
report, as necessary, to the court probation authorities.
This community service program, combined with a shortterm incarceration, would be appropriate punishment in light of
the other punishments already imposed on Mr. Boesky, his cooperation, his previous record of philanthropic service, and his
remorse .
. Ivan Boesky's plea, ultimately,
is a simple plea for
human understanding and mercy, as well as recognition of his
unique cooperation.
He is guilty.
He begs the Court's compas-
sion in sentencing so that he may gather the pieces of his
shattered life and be a productive citizen.
- 7 I.
IVAN BOESKY'S COOPERATION WITH THE GOVERNMENT
HAS BEEN EXTRAORD I NARY •
.Ivan Boesky's cooperation with the Government has been
unique and extraordinary.
When he approached the ·U.S. Attorney
to initiate the process that led inevitably to his
sentencing, "he had not been trapped by any Government investigation.
He had numerous factual and legal defenses and the
resources to fight the Government for years.
cooperate was fully informed.
His decision to
With full awareness of the terri-
ble consequences, he himself made the decision to approach the
Government, plead guilty to a felony, forfeit substantially all
of his assets, and cooperate.
Even the U.S. Attorney has
acknowledged that it was an extraordinary decision.
In a
May 1987 interview, United States Attorney Rudolph Giuliani
described Ivan
Boesky'~
decision:
"Without being arrested, indicted, or convicted, and easily a year away from any realistic period in which he could've been convicted, Boesky agreed to confess to the
crimes he committed, cooperate with the government and return more money than the SEC
could've possibly recovered from him had we
convicted him and taken the full limit to
trial. A lot of people defrauded by him
never would've gotten their money back
because we would've only been able to prove a
small portion of the criminality Boesky later
revealed to ~s. I can't guarantee that we
can convict anybody. And in Ivan's case, we
were just at the beginning of investigating
him. I believe we would've made a case on
him, but I can't tell you how good the case
would've been. There's at least a realistic
chance that Boesky never would've been convicted had he not agreed to plead guilty. If
- 8 he was convicted, it would've happened two
years from now. Many of the leads the government had to obtain for other convictions
would've evaporated. And nothing says that
after he was convicted he would've been
inclined to cooperate." "Collins, Gotcha!
New York Magazine, May 25, 1987 at 30.
Ivan Boesky, through counsel,
the SEC and the
u.s.
initiated contact with
Attorney's Office
At
that time, the SEC had issued subpoen"as-as an initiar""'Step in an
investigation of Mr. Boesky based on
info~mation
provided by
Dennis Levine, who had agreed to plead guilty on June 5, 1986 and
began to cooperate with the Government.
produced.
No documents had been
Neither Ivan Boesky nor any of his employees had
testified in that SEC investigation.
edge, no grand jury
investig~tion
To the best of our knowl-
of Mr. Boesky was then pending.
Had he chosen to defend against the SEC investigation,
that investigation and resulting litigation could have continued
for years.
Indeed, the production and analysis of millions of
Boesky documents without Mr. Boesky's cooperation could by itself
have taken years.
If charges
had ultimately been initiated, they would almost certainly have
been limited to the
~oesky-Levine
relationship.
Levine, the Gov-
ernment's only witness with first-hand knowledge, would not have
been a credible witness, since he had confessed to perjury,
obstruction of justice, tax evasion, and securities fraud.
- 9 Ivan Boesky might have been able to. mount a successful
defense, given his then-enormous financial resources, the ambiguous state of the law, and Levine's previous perjury and
obstruction of justice.
At worst, Mr. Boesky would have remained
in business for years before facing limited criminal charges.
At
best, he would have successfully defended SEC and criminal
charges. 11
In either event, the Government would have invested
years of investigative and enforcement effort and would not have
gained access to the breadth of information that he provided
through his early and complete voluntary cooperation.
Mr. Boesky chose not to resist the SEC investigation.
He quickly reached interrelated plea and settlement agreements
with the SEC and the u.S. Attorney.
Despite the complexity of
those agreements and the need for formal approval from both the
SEC and the U.S. Attorney, the agreements were executed
His
early cooperation saved the Government years and tens of thausands
0
f h ours
0
.
..
21
e ff ort.f lnvestlgatlve
I t a 1 so ena bl e d th e
II
N.Y. Times, December 17, 1985, at 01, col. 6.
(Thomas C. Reed acquitted on insider trading indictment.)
~I
At the time of .Boesky's April 23, 1987 guilty plea,
U.$. Attorney Rudolph Giuliani stated that without Boesky's cooperatfon, it would ha~e taken the Government two years to accomplish as much on its own "if we could have gotten to that stage."
N.Y. Times, April 24, 1987, at 02, col. 4.
- 10 ."
Government
~o
stop or. impede widespread violations of the federal
securities laws and to investigate and prosecute numerous crimes
that would have otherwise escaped detection. 1 /
Mr. Boesky's early cooperation also made it possible
for the Government to use him to collect evidence.
An Assistant
u.s. ·Attorney requested him to make and tape record telephone
calls and to arr:ang.e __ and tape recor.d meet.ings..w.i.th-other-pe.r-sons
_as_di.r:.ec.ted by Gov.e.r:nmen.t invest igators in 1 ight of Mr. Boesky's
disclosures.
Although fearful for his safety, he complied with
the Government's requests.
He placed taped telephone calls and
wore a body wire to meetings with other persons at the direction
of Government agents.
p~riod
These activities were undertaken during a
in which the subjects of his efforts might easily have
learned of his cooperation through an inadvertent leak.
genuinely afraid for his safety.
He was
At that point in the investiga-
tion, Government agents were sufficiently concerned by the
possibility of retaliation to offer him physical protection.
surreptitious evidence collection of the nature
requested by the Government is not an easy or simple matter.
It
is difficult to get sophisticated professionals in the securities
3/
u.s. Attorney Rudolph Giuliani stated: "I think it is
fair to say, without [Boesky's] cooperation there would be substantial people, already convicted, who would be involved in
ongoing fraudulent transactions." Associated Press, April 24,
1987.
-
11 -
business to_discuss and corroborate their past wrongful acts
,~
without arousing suspicions.
The encounters have to be carefully
planned with detailed knowledge of the offense, the targeted
individual, and the relationships between the participants.
Mr. Boesky himself had to provide most of the information used to
plan these encounters.
He also had to act out his role to per-
fection to avoid arousing suspicions.
Despi te these d iff i cult.i.es-and-h is f ear-s-f.o·r-h-i-s
safety, Ivan Boesky undertook each evidence collection task
requested by the Government.
In no case did he warn the targeted
individual of the Government's surveillance.
successfully completed the assignment.
In each case, he
As a result, the Govern-
ment secured immediate corroboration of several of his important
revelations.
This evidence substantially strengthened the Gov-
ernment's cases.
To the best of our knowledge, when Mr. Boesky began
cooperating, there was then pending no active Government investigation of any of
Nor was there any suspicion of the persons who have
pleaded guilty, have been indicted, or are under investigation by
the U.S. Attorney's Office and the SEC.
Without his cooperation, Government investigators would
never have unearthed what he told them in his very first
- 12 -
interview session.
The Boesky/Jefferies
transactions were regular on their face and would have been
'unlikely to trigger Government interest without Boesky's
testi~-
mony.
Searching for these wrongs without
help or guidance in Boesky's millions of documents would have
been impossible.
Ivan Boesky's cooperation was exceptionally extensive,
both in terms of his personal efforts and the quality and
quantity of the information he furnished to the Government.
He
made cooperation his highest priority and devoted himself to
providing the fullest possible information to the Government.
His efforts have continued for fifteen months, and are not yet
complete.
The information he provided to the Government went far
beyond the proffer that formed the basis of his negotiated plea
bargain.
,
He provided the Government with a roadmap to pervasive
misconduct by Wall Street professionals in domestic and
international securities market places.
This information exposed
corrupt behavior at the highest levels of Wall Street and in
- 13 internation~l
securities markets on a scale that Government'
investigators had never imagined.
Boesky's information detailed
a pervasive disregard for the federal securities laws by some of
the nation's largest investment banking firms.
He revealed the misuse of foreign
securities markets to conceal securities law violations.!/
He
disclosed substantial misconduct in one of the largest takeover
transa~tions in British history.2/
All of this information was
previously unknown to the Government.
Without Ivan Boesky's
cooperation, it is unlikely that the Government would ever have
obtained comparable information.
Significant continuing abuses
in the securities markets would have gone undetected and
unpun i shed,.
Mr. Boesky's revelations initiated Government investigat ions of numerous individuals and transactions that were not
previously subject to Government scrutiny.
Faced with the
strength of the evidence he provided, some of those wrongdoers
quickly pleaded guilty and cooperated with Government
4/
See United States v. Michael Davidoff, 87 Cr. 78
(S.D.N'.Y.);- SEC Litigation Release No. 11390 (April 7,1987).
2/
See Letter,from the United Kingdom Crown Prosecution
Service, attached to the Presentence Report.
- 14 authorities_
Martin A. Siegel, former head of the Kidder,
Peabody & Co., Incorporated"Mergers and Acquisitions Department,
pleaded guilty on February 13, 1987.~/
Boyd L. Jefferies, head
of Jefferies & Company, Inc., the largest over-the-counter
market-maker in the country, pleaded guilty on April 16, 1987. 21
Both immediately began cooperating with the Government, triggering several additional criminal and civil investigptions,
including the criminal investigations of Robert Freeman of
Goldman, Sachs & Co., Richard B. Wigton of Kidder Peabody, & Co.,
Inc., and Timothy Tabor, formerly of Merrill Lynch, Pierce,
Fenner & Smith, Inc.
While we are necessarily unaware of all the
indirect fruits of Boesky's cooperation, the indirect fruits are
obviously enormous and likely to continue to grow in the future.
Information that Boesky provided concerning the contest
between Guinness PLC and Argyll Group PLC for control of ,Distillers Company PLC enabled the SEC to demonstrate dramatically
the value of information-sharing agreements among international
securities enforcement authorities.
Based on information that
Boesky gave to the SEC and the SEC gave to U.K. authorities, they
6/
United States v. Martin A. Siegel, 87 Cr. 118
(S.D.N.Y.); SEC v. Martin A. Siegel, No. 87 Civ. 963 (S.D.N.Y.);
SEC Li~igation Release No. 11354 (Feb. 13, 1987).
7/
United States v. Boyd L. Jefferies, 87 Cr. 339
(S.D.N.Y. April 16, 1987); SEC v. Boyd L. Jefferies, No. 87 Civ.
1804 (S.D.N.Y.); SEC Litigation Release No. 11370 (March 19,
1987).
- 15 -
launched the largest securities investigation' in British history,
prompting numerous resignations at Guinness and its investment
bankers, as well as five criminal prosecutions, including Ernest
Saunders, former Chairman of Guinness PLC; Roger Seelig, former'
corporate finance director,of the London investment banking firm
of Morgan Grenfell & Co., Ltd.; Gerald Ronson, Chairman of the
Heron Group, one of the largest private firms In Brit,a,in.;_ Sir
Jack Lyons, former U.K. advisor to Bain & Co. of Boston, Mass.;
and Anthony Parnes, a
United States.
fo~mer
London stockbroker arrested in the
Mr. Boesky is cooperating (with the consent of
the u.S. Attorney and the SEC) with U.K. authorities in their
continuing criminal investigation.~/
U.S. authorities are likely
to benefit substantially in the future as Britain and other
nati,ons reciprocate by providing information concerning potential
violations of U.S. laws.
Mr. Boesky's cooperation contributed to the Government's ability to achieve reforms in the administration of the
federal securities laws.
Legislation to define "insider trading n
is pending in Congress and -has been endorsed by the SEC.
Addi-
tional legislation to curb abuses in the corporate takeover area
is also pending in Congress.
Jefferies & Company and Kidder,
Peabody & Co. Incorporated are subject to new court-imposed
~/
See Letter from Crown Prosecution Service, attached to
the Presentence Report.
- 16 compliance procedures.
Kidder, Peabody & Co. Incorporated dis-
"b
"9/
b an d e d Its
ar"Itrage operations.-
"
Numerous Wall Street fIrms
have strengthened their securities law compliance efforts.
These
reforms extend far beyond the specific conduct revealed by
Mr. Boesky, but the momentum necessary to achieve them resulted
in large measure from his cooperation in providing information
about previously undetected securities law violations.
Ivan Boesky spent hundreds of hours preparing for and
attending interview sessions with at least sixteen different Government investigators from the SEC, the U.S. Attorney's Office,
and the U.S. Postal Service.
In these sessions Boesky identified
and assisted the Government in developing more than
crim-
inal and civ.il ~ases, resulting to date in more than $34 million
in disgorgements and civil penalties, in addition to his own
guilty plea, SEC injunctive settlement, administrative consent to
be barred from- the regulated securities business, consent to loss
of his license to practice law, and $100 million payment of personal assets in disgorgement and civil penalties.
2/
Kidder, Peabody entered into a settlement with the SEC
pursuant to which Kidder, Peabody consented to a civil injunction, disbanded its arbitrage department, agreed to disgorge
approximately $13.6 million, paid a civil penalty of $11.6 million, and consented to the imposition of an SEC administrative
order. SEC v. Kidder, Peabody & Co., No. 87 Civ. 3869 (S.D.N.Y.
June 4, 1987).
- 17 -
Bpesky's interview sessions with U.S. Government agents
have been continuing for
plete.
and are not yet com-
The interviews have covered his personal background, his
business history, the philosophy and technicalities of the merchant banking and arbitrage businesses, the functions performed
by his staff of nearly 100 employees, his dealings with dozens of
Wall Street figures, the financing of his arbitrage
corpo~ations
and partnerships, the details of hundreds of merger and takeover
transactions, and the specifics of thousands of transactions in
over 100 different stocks.
In these sessions, he repeatedly vol-
unteered valuable information suggesting new avenues of inquiry
to investigators.
He also shared with Government investigators
pis educated guesses and suspicions about wrongful conduct in the
securities market place.
While the
la~ter
information may not
lead to immediate prosecutions, it should provide useful guidance
to investigators in shaping future enforcement efforts.
From the time that his cooperation first became public,
Ivan Boesky has also actively encouraged his employees to cooperate fully with the Government.
As a result, at least sixteen
current and former employees have cooperated with the Government,
providing extensive additional information to investigators.
These employees have corroborated information he supplied,
described the details of transactions that he directed or
approved, and revealed their own contacts with others involved in
Government investigations.
This additional information would not
I
- 18 -
have been ayailable to the Government without Boesky's cooperation and the encouragement he gave his employees in cooperating.
He has also maintained a skeleton staff at IFB Managing
Partnership, L.P., primarily for the purpose of assisting in
responding to Government information requests and in producing
documents.
This staff has greatly enhanced the speed and quality
,of~the_i.nf.o.r.ma.t-i.on_Llow.i.ng_to_
the Government.
In the course of his cooperation, he arranged for hun-·
dreds of thousands of pages of documents in the possession,. custody and control of his entities to be made available to the Government.
He arranged for counsel to assist the Government (at no
cost to the Government) in cataloguing, indexing, and producing
more than a half-million pages of documents.
Boesky repeatedly
called investigators' attention to the most sensitive and informative of these records, the significance of which would not have
been apparent without his explanations.
His assistance in col-
lecting, organizing and explaining these documents saved investigators thousands of hours and made it possible for investigators
to understand and obtain admissible evidence of transactions
which would otherwise have escaped Government attention.
Ivan Boesky's cooperation thus provided enormous immediate benefits to the
~overnment.
It relieved the Government of
the time, cost, and manpower that would have been required to
prosecute Boesky.
It provided the Government with a tremendous
- 19 -
head start on investigations of other wrongdoers, an
a~vantage
that was so overwhelming that several of those wrongdoers quickly
determined to cooperate, saving the Government yet more time,
cost, and manpower.
Mr. Boesky's cooperation gave the Government
the momentum and pUblicity to interdict some crimes and deter
other crimes.
Thus, si'''!ply from the viewpoint of effort and expense,
Boesky's cooperation has been extraordinary and invaluable to the
Government.
Boesky, however, has paid a high price for his
extensive cooperation.
Although the out-of-pocket expense has
been substantial, there have also been significant psychological
and emotional costs.
He has been vilified in the press almost
daily for fifteen months,_and his cooperation exacerbated the
vilification.
His cooperation has made him an outcast among many
of his former friends and business acquaintances.
After years of
an active busi~ess, social and philanthropic life, he has been
banished and relegated to a near solitary existence.
Most of the
charitable organizations that he once supported generously have
refused to permit him to perform voluntary community service.
Ivan Boesky's cooperation has left him in a state of
limbo.
He has been unable to commence building a new life.
has been isolated and emotionally incarcerated throughout the
fifteen months he has spent cooperating.
He
- 20 -
Ivan Boesky_Should Receive Extraordinary Credit
For His Cooperation.
As demonstrated above, Ivan Boesky's early voluntary
cooperation conferied many unprecedented benefits upon law
enforcement authorities.
He evidenced substantial courage and
fortitude in initiating such cooperation.
It was certainly not
in his economic interest and he has paid a monumental price in
public humiliation.
Such extensive and personally costly cooper-
ation shows his genuine remorse for his unlawful acts and his
commitment to do as
~uch
as humanly possible to correct the con-
'sequences of the misdeeds in which he and others participated.
In our enormously complex international financial
world, financial crimes are easily hidden, and wealthy wrongdoers
have vast resources to fight investigations and criminal charges.
Society must encourage others to come forward and cooperate with
Government authorities.
Only through cooperation will financial
crimes be identified and prosecuted.
Only through cooperation
will scarce governmental investigatory resources be sufficient to
halt abuses.
Society must also encourage those who cooperate to do
more than the minimum necessary to comply with plea agreements.
Had Boesky merely delivered what he proffered to the Government
cooperation would have been extraordinary.
In fact, however, his cooperation went far beyond the proffer
upon which his plea agreements were based.
- 21 -
ML. Boesky should thus receive extraordinary credit for
his cooperation.
The Court should recognize that his cooperation
was far more extensive than the minimum necessary for him to comply with his plea agreements.
The Court should also recognize
that his cooperation was earlier, more voluntary, more extensive,
and more valuable than Dennis Levine's cooperation.
Levine per-
jured himself, suborned the perjury of others, and obstructed
justice until his arrest.
After arrest, he claimed his Fifth
Amendment privilege and he and his counsel publicly denied his
crimes.
He resisted the SEC's motion for preliminary injunction.
Only after his assets were frozen by judicial order and conviction was inevitable did Levine begin to cooperate.
Levine's
belated cooperation nevertheless earned him between sixty percent
and eighty percent credit off of the sentence he would otherwise
have received,lO/ and ninety percent credit off the maximum 20year sentence on the four counts to which he pleaded guilty.
It would be unfair if Ivan Boesky should receive less
credit for his cooperation, which was more voluntary, far more
e"xtensive, and immeasurably more valuable to the Government than
Levine's cooperation.
If that were to happen, it would convey
10/
In sentencing Dennis Levine, Judge Goettel stated that
Levine's "offense, standing alone, is such as to warrant a sen-.
tence of five to ten years' imprisonment," but sentenced Levine
to two years imprisonment in light of his cooperation. Transcript of Sentencing, United States v. Dennis Levine, 86 Cr. 519
(S.D.N.Y. February 20, 1987).
- 22 -
the message_to other· potential criminal defendants and their
counsel that little is to be lost by stonewalling Government
enforcement efforts and little is to be gained by immediate voluntary cooperation with Government inquiries.
- 23 -
II.
IVAN BOESKY HAS PAID A DEVASTATING PRICE FOR HIS
WRONGDOING.
As a result of his unlawful conduct, Ivan Boesky has
lost everything that he has worked a lifetime to achieve.
He
offered his resignation to the Michigan State Bar and has been
voluntarily disbarred.
He agreed to a voluntary lifetime bar as
a securi ties proress ional.
His arbi trage _par_tner:sh.i.ps_have_been
turned over to a_Li.quidat i ng partner and largely I iqu idated.
Hi s
personal $13 million investment in those partnerships is worthless.
He resigned as Chairman of Cambrian & General PLC, the
English investment trust he helped to revitalize.
He also
resigned as Chairman of Northview Corporation, a California hotel
and communications business.
He paid $100 million -- $50 million to
~n
escrow fund
and $50 million in civil penalties -- which together with his
now-worthless investment in his business and his legal expenses
represented virtually his entire net worth.
United· States Attor-
ney Giuliani has acknowledged not only that the $100 million paid
to the Government destroyed Boesky's wealth but also that it represented a greater monetary sanction than would have been imposed
upon conviction after a contested trial. '
nIt'll [the financial settlement] come very
close to wiping him out. It will not leave
him or his family without a home. But Boesky
will lose if not all, then the overwhelming
majority of the ill-gotten gains that he
received -- which is substantially more than
-
24 -
happens to people whom we convict after a
trial." Collins, Gotcha! New York Magazine,
May 25, 1987 at 31.
Boesky faces 1awsuits claiming hundreds of millions of
dollars in damages, some of which assert novel legal, and attenuated factual, theories. 11 /
He lacks the wherewithal to pay the
likely costs of defense, let alone possible damages beyond the
$.5.0 mU.U.on-escrow fund-.
He will like-l-y
~spend-
year-s-o.f his life
as a witness in civil, regulatory,-c:·r-i-m-i-na-l, and poss-i-b-l-y-congressional proceedings.
Personal bankruptcy is likely.
He has resigned from all of the boards and committees
on which he served, and the prestigious social clubs to which he
belonged. M~ny former friends and acquaintances shun him-in
.
12/
chance public encounters.-He has been forced to terminate the
" Healt h Fe 11' ows h'Ip create d 'In h'IS name-13/ an d t h e
Harvar d Pu bl lC
Princeton University Center of International Studies he had
11/
Ivan Boesky is a defendant in 19 private civil lawsuits
claiming losses, restitution, treble damages, punitive damages,
attorneys' fees, and.costs far in excess of $1.7 billion. One
case, filed by FMC Corporation, claiming approximately $225 million in damages, has already been dismissed for failure· to state
a claim. An appeal is pending in the United States Court of
Appeals for the Seventh Circuit. Another case, a class action~
captioned Sperber v. Boesky, No. 86 Civ. 9232 (6L6), alleging
RICO violations, was recently dismissed by Judge Goettel.
12/
Letters from Joseph Papp, attached as Exhibit land
Chris Gersten attached as Exhibit 2.
13/
Exhibit 3.
See Letter from Jay A. Winsten, Ph.D, attached as
- 25 -
sponsored.I~1
He voluntarily removed his name from the library
he helped to build for the Jewish Theological Seminary.
Despite
his years of hard and successful work for the UJA Federation, his
offers of volunteer community service were rejected by a Jewish
agen~y
for the blind and other organizations.
He was ultimately
accepted as an unpaid counselor for homeless men. 121 He was
accepted on the condition that he work under an assumed name and
under pain of termination if there is the slightest press coverage.
The public recognition that Ivan Boesky sought and
achieved has turned especially bitter.
He has been vilified in
the press every week, and in some weeks every day, for fifteen
months with no end in iight.
He has been subjected to vicious
parodies on the "Saturday Night Live" television program and in
nationally syndicated cartoon strips.
See Exhibit 6.
Photogra-
phers on Wall Street's sidewalks sell group pictures including a
six-foot cardboard caricature of Boesky.
See Exhibit 7.
His
name has -- unfairly -- become synonymous with all that is wrong
with the securities markets.
He has been hounded and harassed by
reporters and pushed, shoved and physically abused by photographers.
Iii
121
Neither he nor his family can suffer in peace.
See Letter from Henry S. Bienen, attached as Exhibit 4.
See Letter from the Rev. Charles P. Pridemore, Assistant for Pastoral Ministries, attached as Exhibit 5.
- 26 -
Iyan Boesky's fall does not excuse his wrongs, but it
has been punishing.
his wealth".
His power has become impotence.
He has lost
His fame has yielded horrible notoriety.
been abandoned by all but a few remaining friends.
aged precious family relationships.
faces an uncertain future.
He has
He has dam-
He is now largely alone and
- 27 -
III.
IVAN BOESKY LED A PRODUCTIVE LIFE.
Ivan Boesky carne from a middle-class background in
Detroit.
He started working at age thirteen.
He was unable to
establish himself as a lawyer and initially had trouble finding a
job in the securities industry.
Hemar~~ed
25 years.
Seema in
}96~
and
They raised four-ch-i-ldren.
other members of Ivan Boesky's family.
tinues to be, a good father.
she-has~een
his wife for
They-gen-erously supported
Ivan Boesky was, and con-
His misconduct has hurt his family
and he is trying to make amends.
From his early days in Detroit, Ivan Boesky has also
devoted himself to less-fortunate people.
He has given of his
time, his experience, and his money to educational, religious,
cultural, and medical charities.
He has helped numerous
people -- relatives, friends, employees, and strangers.
Over
many years he has compiled an exemplary record of public and private community service.
Ivan Boesky Has Been A Devoted Father And
Supportive Family Member.
Ivan Boesky is a devoted and loving father.
Boesky's
greatest penalty lies in the suffering he has caused his family.
He has been "torn by the agony of explaining his conduct to his
four children, in whom he had tried to instill high moral
-
28 -
values.,,16/_. Seema, his wife, wrote to the probation officer:
"Ivan has been a model father and has been
instrumental in setting the highest standards
of ethics and morality in our home. Therefore, the recent scandal is an ,aberration in
his general conduct which our family has
found difficult to understand. He has taught
us philanthropy, religion and he has always
been an observant Jew, encouraged truth and
honesty regardless of consequences
• • • • "11...1
Ivan Boesky-found it painful, but morally necessary, to
admit his wrongs to his children.
hurt.
The children are confused and
Since last fall, Ivan Boesky has spent as much time as
possible helping his children -- especially his youngest
children -- cope with the consequences of his wrongdoing. 181
Mr. Boesky has long supported other members of his
family.
His sister suffered from disease more than 10 years ago.
He has given her moral support, comfort and virtually all her
co~tinuing financial support for more than a decade. 191 He has
also helped his 83-year old mother, who suffers from heart
161
Letter from Mr. Boesky's psychiatrist, appended to the
U.S. Probation and Parole Office Presentence Investigative
Report, hereinafter "Presentence Report."
11,,/
Letter from Mrs. Seema Boesky, attached as Exhibit 8.
181
Letters from educators and others who have worked with
Mr. Boesky's children are attached to the Presentence Report.
See. letter from Charles D. Lieber, attached as Exhibit 9.
191
Letter from Ms. Suzanne Davis, attached as Exhibit 10.
- 29 -
disease.
She writes that her son nhas always been a very devoted
family man. n20 / He has also provided long-term financial support
to other family members.
Ivan Boesky's devotion to his family, and especially
his children, is a strong theme that recurs throughout the letters written to the Court on his behalf.
Daniel Honigman, a
"Although I know that superlatives are suspect in a character' reference of this nature,
I, nevertheless, must say that I have never
known anyone who has been more a caring,
kind, considerate and devoted family man and
father, than Ivan.nIl/
Ivan Boesky Has Repeatedly Helped Employees And Strangers.
Mr. Boesky has repeatedly reached out to help less fortunate people.
Judge Norman L. Lippitt of the Michigan Circuit
Court, who has long known Mr. Boesky, writes:
nThroughout Ivan's years of success, he
always had time for old friends, acquaintances and young people, regardless of their
relative unimportance in Ivan's world, and
regardless ~f how busy he was. Thro~gh the
years, story after story has come back to me
about how reachable Ivan was and how he
always had time for everyone . • . • n22/
20/
Letter from Mrs. Helen Boesky, attached as Exhibit 11.
21/
Letter from Daniel M. Honigman, attached as Exhibit 12.
22/
Letter from Michigan Circuit Court Judge Norman L.
Lippitt, attached as Exhibit 13.
-
30 -
The examples of Boesky's reaching out to help other
less fortunate people -- friends, employees, and strangers -- are
numerous.
Mr. Boesky routinely provided extraordinary benefits
and individual help to his employees.
He paid the educational
expenses of every employee who attended school of any kind.
Murry Si lver, --a--long-t-er-m-employee whom Mr. Boesky
maintained through-a-leng-t-hy period-o-f-i-I-I-ness and rehabilitation
that other employers might not have tolerated, has recounted the
good salaries, insurance, and health benefits that Boesky as a
sole proprietor provided to his employees. 231
Mr. Boesky first met Nancy Hollander when she worked in
a bank after graduating from business-school.
better employment on Wall Street.
He helped her find
When another job did not work
out well, he hired her as a research assistant.
He "contributed
to [her] professional growth during the time [she] worked in the
arbitrage research department" and advised her with respect to
her subsequent employment after he began to liquidate his business as required by his SEC agreement.
She describes how he made
an effort to ease her grief by driving several hours to attend
the funeral of her father, whom Mr. Boesky had never met. 241 He
Letter from Murry Silver, attached as Exhibit 14.
Letter from Nancy Hollander, attached as Exhibit 15.
- 31 -
has also
sp~nt
countless hours counsellirg other employees,
helping them through difficulties, and assisting them in finding
new employment.
Mr. Boesky hired Johnnie Ray as a driver after the man
was fired from a previous job.
He helped Johnnie Ray by teaching
him job responsibility, visiting his family, and helping him to
purchase the __ f_i.r:s_t_and_onLy_house he has_owned_.
Johnn ie-Ra-y-~
obviously strugg.led to write in longhand that Mr. Boesk-y-hadtreated him "as a friend and brother, who has given me support
through good times and bad."25/
Mr. Boesky's genuine personal respect and affection for
his employees caused him great personal anguish about the consequences of his plea agreement upon his employees.
unsucce~sfully
the protection
~f
He sought
immunity for all his employees.
He has accepted broad responsibility for their acts on his
behalf.
His psychiatrist wrote:
"He remains concerned about his many loyal
employees. Some of them have apparently
served him for years. He accepted full
responsibility for all of their activities
pursuant to his direction. He is deeply
trouble [sic] that some of them may have to
plead guilty to crimes committed at his
direction, or suffer other penalties. He
wants to help each of his former employees
find new employment, although he recognizes
that his ability to do so is limited."26/
25/
Letter from Johnnie Ray, attached as Exhibit 16.
Letter from Mr. Boesky's psychiatrist, attached to the
26/
Presentence Report.
- 32 -
Ivan Boesky's personal and individual assistance was
not limited to his business employees.
He has a special
in education and provided educational help for others.
inter~st
He sent
Edwidge Emmanuel, a Haitian maid who worked in his home, to a
school for medical technicians, enabling her to secure a meqical
technician's job at New York University.
He also paid for her
first vacation and offered to send her to medical school. 27 /
Similarly, Haldan Connor describes how Ivan BQesky
befriended him as an orphaned young man without profession or
means.
Mr. Boesky helped him find a stock exchange job.
There-
after Mr. Boesky encouraged him to go to law school, helped pay
for his legal education and assisted him in establishing his
·practice. Today, Haldan Connor is a practicing lawyer in Con.
28/
nectlcut.Ivan Boesky has also reached out to help .complete
strangers.
Joseph Brady, a retired lieutenant of the New York
Fire Department, wrote to the Court describing how Ivan Boesky
responded to his letter and provided financial guidance' to
Mr. Brady and his family.29/
D"/
Mr. Brady's letter is all the more
Letter from Edwidge Emmanuel, attached as Exhibit 17.
28/
Letter from Haldan E. Connor, Jr. , attached as
Exhibit 18.
29/
Letter from Joseph N. Brady, attached as Exhibit 19.
- 33 remarkable
~cause,
although Ivan Boesky and the retired officer
corresponded and talked by telephone, they have never actually
met.
Michigan Circuit Court Judge Norman Lippitt summarized
this aspect of Ivan Boesky's life:
"[T]here are few among us who have repeatedly
demons_t.r..a_t.ed_a w_Ll_l_ingness to reach out toothers without any possible benefit or remuner..a_t_ion_ to ourse.Lv-es-.-Ivan has spent a
lifetime doing just that. I do earnestly
hope that in sentencing Ivan for whatever
mistake he has made, that his past good deeds
will be given the weight they so richly
deserve."30/
Ivan Boesky Has Been A Dedicated Philanthropist.
Ivan Boesky has devoted a significant portion of his
adult life to philanthropy.
Beginning as a high school student,
he has led or participated in fundraising drives for numerous
charities and made substantial personal contributions.
He was
always "responsive to charitable requests above and beyond the
call of duty."l!/
Over the years, he has made significant per-
sonal commitments and financial gifts in four areas of special
interest -- education, religious organizations, civic and
30/
~ippitt,
Letter from Michigan Circuit Court Judge Norman L.
attached as Exhibit 13.
31/
Letter from Harry E. Gould, Jr., attached as
Exhibit 20.
-
34 -
cuI tura I or.g.an i zat ions,. and med ical research.
Frank Brunet ta, a
former business associate, wrote:
"I have known Ivan professionally and personally. Particularly striking has been his
sincere interest in helping others, his deep
religious convictions, his involvement with a
variety of educational, cultural and medical
institutions • • • • "32/
In
the~e.ducat
ional ar:ena he has given .t.ime-and
resources to educat ional organizat ions, includ.i.ng-the Eagle-H-i-l-l-Foundation,111 Princeton University,li l Harvard university,351
Greenwich Country Day school,361 Jewish Teachers Training College, Yeshiva University, Jewish Public School Youth, the Horace
Mann School, and the Taft School.
He served as a director of the
Eagle Hill schoolll~ and as a trustee of Yeshiva University and
the Greenwich Country Day School. 381
He made a signi.ficant con-
tribution towards a library to house the nation's largest
111
Letter from Frank P. Brunetta, attached as .Exhibit 2l.
Letter from Mark J. Griffin, attached to the Presentence Report.
111
341
Letter from Henry S. Bienen, attached as Exhibit 4.
351
Letter from Jay A. Winsten, Ph. D. , attached as
Exhibit 3.
361
Letter from Peter G. Briggs, attached as Exhibit 22.
TIl
Letter from Mark Griffin, attached to the Presentence
381
Letter from Peter G. Briggs, attached as Exhibit 22.
Report.
- 35 -
collection of Judaic writings at the. Jewish Theological .Seminary.
He purchased and loaned to the Seminary a valuable collection of
rare and original Jewish books, including fragments of Babylonian
and Jerusalem Talmuds.
He was in the process of funding a fel-
lowship and a new building housing a Center for Jewish Life and
Center of International Studies/Economics at Princeton University
when his plea and SEC settlement intervened. 39 /
Ivan Boesky has
generousl~ sup~orted
religious
organizations and groups with his time and resources.
As a
teenager, he was President of the Junior Division of the Jewish
. .1n Detro1t,
..
40/
We If are Fe d erat10n
M1C h·19an.--
k he
In New Yor,
labored in the ranks of the Wall Street Division of the UJA Federation and served as the Chairman of the Wall Street Division
UJA Federation campaign.
His success with the Wall Street cam-
paign gave him the opportunity to serve as the General Chairman
of the New York campaign, the highest lay-leadership position in
the New York UJA Federation community.
He "not only gave gener-
ously of his money but also of his time, energy and talents."41/
"[H]e consistently made pace-setting gifts, made numerous solicitat ions for support from others and gave generously of his time
in chairing campaign cabinets, addressing fundraising events and
39/
Letter from Henry S. Bienen, attached as Exhibit 4.
40/
Letter from Daniel M. Honigman, attached as Exhibit 12.
41/
Letter from Ernest W. Michel, attached as Exhibit 23.
- 36 A'
. •
gUl. d'Ing t h e-ulverse
operatlons
0
f
.
42/
t h e. Campalgn."--
Overall, he
helped raise more than $250 million for the UJA Federation.
In
all of his fundraising activities, he "was always generous with
his home and his time as well as his money" and treated those
with whom he worked with courtesy and respect. 43 /
After reading a New York Times article about Claude
Lanzrnann.,
w.ho,~had
spent 10 years creat i ng a Ho-loGaust-doGumen·t;.a-I"Y
("-Shoah.!!....}-,- Mr. Boesk-y-Ga-I-led Mr. Lanzmann and arranged a meet ing.
Thereafter Mr. Boesky discussed the possibility of broadcasting
the documentary.with representatives of the Educational Broadcasting Service ("EBS").
He "decided to do everything within his
power to have [Shoah] shown to the American public."44/
With EBS
agreement, Mr. Boesky arranged for sponsors, including himself,
to raise $1.5 million to compensate Claude Lanzmann and finance
production costs for the Shoah documentary broadcast on public
television. 45 / Those involved describe Mr. Boesky's efforts as
"a public service of extreme magnitude."46/
Mr. Boesky also
served as a member of the New York Holocaust Memorial Commission
42/
Letter from Morton A. Kornreich, attached as
Exhibit 24.
Letter from Judith Frede Love, attached as Exhibit 25.
Letter from Charles I. Scher, attached as Exhibit 26.
45/
Letters from Claude Lanzmann, attached as Exhibit 27
and Robert Wechsler, attached as Exhibit 28.
46/
Letter from Charles I. Scher, attached as Exhibit 26.
- 37 -
and withdrew his name from nomination to the. Presidential
Holocaust Commission because of his SEC and plea agreement.
Ivan Boesky's personal gifts to religious organizations
include substantial sums to the Jewish Theological Seminary, the
Simon Wiesenthal Center (founding contributor), Raoul Wallenberg
Committee, the Jerusalem Foundation, the American-Israel Friendship Leag.ue.,_ .the. Associa.t.ion pour Ie Retablissement Des I.nstitutes et Oeuvres Israelites en France, ·the-New
York-G-i-t-y·-~­
Holocaust Memorial, and the UJA Federation.
His support for various civic, cultural and artistic
groups was also extensive and included personal
o~
financial sup-
port for the Smithsonian Institution, the Metropolitan Museum,
American Ballet Theatre, the San Francisco Ballet, the Israel
Philharmonic Orchestra, and La Mama Theater in New York.
of his time as well as his money.
n[H]e was always
~
He gave
man whose
private actions matched his publically [sic] documented
generosity.n 47 / By mayoral appointment he served as a trustee on
the commission that planned the addition to the New York Museum
of Modern Art.
He served as a director of the New York'
Shakespeare Festival, sponsoring a Shakespeare program on
Broadway for New York City school children. 48 / He also served as
47/
Letter from Jule Styne, attached as Exhibit 29.
48/
Letter (rom Joseph Papp, attached as Exhibit 1.
- 38 -
a director gnd·contributor to New York's La Mama experimental
theater.
In the medical field, the Boeskys started the Gertrude
Levin Pain Clinic at Wayne State University in Detroit.
In
recent years Ivan Boesky has supported the Dystonia Medical
Research Foundation, a New York University Hospital program for
abused children, the Sloan Kettering Cancer
Gen~er,
the Einstein
School of Medicine, Orentreich Eoundation skin cancer research,
and medical research at the University of Toronto.
As a member
of the Board of Visitors of the Harvard School of Public Health,
he started and funded a visiting fellowship for health policy
information at that school. 49 /
Ivan Boesky Led An Active Professional Life On
Wall Street For 21 Years.
Ivan Boesky's professional life as. law school graduate,
arbitrageur, merchant banker, broker-dealer, author, and business
school lecturer is perhaps most relevant to his sentencing
because his years of hard work and public achievement ended in
humiliating disgrace.
He attended Wayne State University, Uni-
versity of Michigan, and Eastern Michigan University.
After law
school at Detroit College of Law and-a clerkship for Chief Judge
Theodore Levin in the United States District Court for the
49/
Letter from Jay A. Winsten, Ph.D., attached as
Exhibit 3.
- 39 .Eastern District of Michigan, Mr. Boesky could not secure a suitable job with a law firm.
He decided to try Wall Street.
When he arrived on Wall Street 21 years ago, he had
gr.eat trouble finding a job.
From a humble start, he invested
years of unremitting hard work, often 20 hours a day.
After six
or seven years of apprenticeship at various firms, he started his
own business in 1975.
He_bu.i.lL.that bus.i.ness in corpor-a·t-e-or
partnership form from 1975 to 1986.
By the early 1980..!.s-he-had
more success than many achieve in a lifetime.
He was neverthe-
less driven by some blind compulsion toward even greater achievement.
By mid-1986, his arbitrage partnerships held approximately.S3 biiiion in securities and employed nearly 100 people.
He directed brokerage ·firms in New York City and an investment
firm in Bermuda.
He was Chairman of the Board of Cambrian &
General PLC, an English investment company, and Northview Corporation, a California-based hotel and communications company.
His
entities traded nearly 2 percent of the entire volume of stocks
on the New York Stock Exchange.
During those same years, Ivan Boesky served on dozens
of boards and committees.
He lectured at a dozen business·
schools, including Harvard University, New York University,
Columbia University, University of California, Boston College,
University of Michigan, Rice University, Randolph Macon College,
- 40 -
Wharton SchQol of Business, Duke University, University of
Chicago, and others.
He served as Finance Chairman of the
National Jewish Coalition, faithfully attending meetings and
raising money. 501
He le'd a highly-publicized political, busi-
ness, and social life.
In short, Ivan Boesky had achieved many
of the goals that inspire people to undertake long arduous workdays and great financial risks.
Unfortunately, success became its-own-trap, blinding
Ivan Boesky to the line between legitimate business deals and
unlawful transactions.
He became taught up in a high-pressure,
fast-paced system where corruption was unfortunately rampant.
gave and
s~ught
He
unlawful accommodations in his business dealings
with financiers and brokerage firms.
His psychiatrist offers a
partial explanation:
"[Ivan Boesky] has begun to recognize that he
suffered from an abnormal and compulsive need
to prove himself, to overcome some sense of
inadequacy or inferiority that is rooted in
his childhood. He was driven to work without
any limit of time or effort. He sacrificed
closeness with family and friends without
realizing that it was happening . . . . "51/
As a result, Mr. Boesky has lost everything for which
he ever worked.
501
In virtually every area of his life, he has
Letter from Chris Gersten, attached as Exhibit 2.
511
Letter from Mr. Boesky's psychiatrist, attached to the
Presentence Report.
- 41 achieved
th~
opposite of what he
lost his pride and his good name.
quences for the rest of his life.
sough~
In the process, he has
He will suffer the conse-
- 42 IV.
IVAN BOESKY'S ACTIONS REFLECT HIS REMORSE
Ivan Boesky's decision to coqperate and his unprecedented subsequent cooperation with the Government can only be
explained as his personal repudiation of his wrongful conduct.
He simultaneously acted to recompense those arguably
hurt by his conduct.
All of his
securi~ies_trading
had-been
con~
ducted through investor-owned partnerships or corporate entities.
Boesky sought to protect those entities and their investors by
forfeiting his personal funds.
He placed $50 million of the
$100 million taken by the Government in escrow to resolve claims
against him and the entities over which he exercised investment
control.
He would have placed the whole $100 million in that
escrow had the SEC not insisted upon a civil penalty.
After announcement of his plea and SEC agreements on
November 14, 1986, he worked diligently to achieve a repayment of
$640 million in indebtedness owed by his principal arbitrage
partnership.
The resulting settlement saved his principal arbi-
trage partnership millions in accrued interest and $99 million in
debt repayment penalties.
The main arbitrage partnership now
holds approximately $300 million 'in cash equivalents to repay
investors (excluding Ivan Boesky) who invested about $320 million
(including $100 million invested by Guinness PLC).
As a result
of his actions in these respects, there remains a realisfic
possibility, subject to uncertainties about future claims, that
innocent investors in the Boesky enterprises will emerge whole.
- 43 -
B.9.esky' s·in i t i at ion of contact . . . i th the Government, his
unique cooperation, and the steps that he has taken to rectify
his wrongdoing reflect a remorseful and repentant man.
His other
actions in the last year also evidence his contrition.
He
entered into and diligently pursued psychiatric treatment.
His
psychiatrist states that n[h]e accepts full responsibility for
his improper actions and recognizes that they ar [sic] ..... rong. n52 /
Mr. Boesky's ..... ork ..... ith homeless-men has contributed to
a new understanding of his relationship to society and less fortunate people.
Father Pridemore has ..... ritten to the Court that
Mr. Boesky's . . . ork n..... ould seem to have changed his outlook on
right and ..... rong and good and evil. n53 /
Boesky's repentance and his search for moral and
ethical foundations upon ..... hich to reestablish his iife have led
him to pursue an intense and. systematic program of religious
instruction.
Since June 1987, he has spent more than 800 hours
of classroom ..... ork and study under the auspices of the Je ..... ish
Theological Seminary.
Rabbi Wolfe Kelman, Mr. Boesky's counselor
at the Seminary, describes both ·the intensity and seriousness of·
Mr. Boesky's studies:
52/
Letter from Mr. Boesky's psychiatrist, attached to the
Presentence Report.
53/
Letter from The Rev. Charles P. Pridemore, Assistant
for Pastoral Ministries, attached as Exhibit 5.
- 44 "He is applying all that energy and all
talent to the study of Judaism, which I
quite remarkable. . . . ~ know he does
homework. He is responding in a very
positive way, with a great deal of joy,
his studies."54/
that
find
his
to
And, in his letter to the Court, Rabbi Kelman discusses
Mr. Boesky's "full candor and honesty" in private discussions
·
.
h·IS s h ame.-55/
a dIn Ittlng
Friends-and-Fe~atives
Ivan Boesky reassessed his life.
have observed profound changes as
Robert Wechsler, a friend of
20 years standing, writes:
"[Ivan Boesky's] fall has elements of real
tragedy, and this past year has tempered his
character. I truly believe that his
priorities are now much better order-ed, and
that he views life from a new and vastly more
profound perspective."56/
David Hermelin, another friend of 40 years, writes:
"[Ivan Boesky] is filled with a sense of
remorse for that which he has done, and he is
deeply distressed. I strongly believe that
he is committed to applying his skills and
talents to positive and caring community
endeavors."~l/
54/
Rabbi Wolfe Kelman, quoted in The Washington Post,
November 8, 1987, at H4, col. 4.
55/
Letter from Rabbi Wolfe Kelman, attached as Exhibit 30.
56/
Letter from Robert Wechsler, attached as Exhibit 28.
57/
Letter from David B. Hermelin, attached as
~xhibit
31.
- 45 -
Daniel M. Clark, a friend of 25 years, writes:
"A deep strand of family pride has been torn
at, and the emerging personality is one of
new-felt respect and dependency upon the
loving kindness of his wife, children, mother
and others. With me~cy . . . this strand
will mend and the whole pattern of his life,
at last . . . the whole texture of his being
wi 11 be for the bet ter. "58/
58/
Letter from Daniel M. Clark, attached as Exhibit 32.
See also letters from Sammy Cahn, attached as Exhibit 33; Nathan
Applemen, attached as Exhibit 34; Max Fisher, attached as
Exhibit 35; and Charles D. Lieber, attached as Exhibit 9.
- 46 -
v.
IVAN BQESKY PLEADS FOR COMPASSION TO PERMIT. HIM TO RESUME A
PRODUCTIVE LIFE.
The Court has vast experience in
b~lancing
the
competing factors of retribution, cooperation, deterrence, restitution, consistency, and rehabilitation that go into sentencing.
In applying that balance, Boesky asks the Court to weigh the past
and inevitable future retribution that society has already
imposed and will
con~inue
to impose for the rest of his life.
He
also asks the Court to ignore the cry for vengeance from those
who would punish him for cooperating with the Government's investigation of financial abuses.
The cooperation in this case is unique and without parallel in modern
securities~history.
Ivan Boesky substantiated
all the elements of his· proffer, and his cooperation extended
enormously far beyond.
He provided the Government with informa-
tion concerning, and guided it to proof of, nationwide financial
crimes by the highest leaders of our investment banking and
financial communities.
Neither the SEC nor the U.S. Attorney had
any inkling of these abuses before Ivan Boesky voluntarily
approached the Government.
His cooperation will make a vital
contribution to the Government's ability to achieve significant
reforms that were long overdue.
.... R~vocation
47 -
of license, loss of lifetime profession,
destruction of reputation, forfeiture of wealth, demise of social
position, and abandonment by friends are powerful deterrents for
financial crimes.
Media revilement and endless civil litigation
p'o i nt i ng inexorably toward personal bankruptcy, wi 11 also deter
others in the financial conununity.
Ivan_Boesky's
coope~ation
The publicity associated with
has deterred and will deter others with
the capacity to conunit financial crimes.
The added Government
enforcement efforts triggered by his cooperation stopped, and
will continue to stop, other wrongdoers, as will the precedent he
established by paying multi-million dollar civil penalties.
If the Court believes that incarceration is necessary
for deterrence, Ivan Boesky pleads that it be
limited~
Short-
term incarceration is an effective deterrent, specifically recom..
f or f·lnanCla
. 1 crlmes.-.
59/
.
men d ed b y t h e Sentenclng
ConunlSSlon
Moreover, Ivan Boesky will serve any period of incarceration
under especially onerous conditions.
Even in federal facilities
designated for cooperating Government witnesses, he will, in all
likelihood, be deprived of programs and opportunities routinely
available to other inmates. 601
591
Testimony of Honorable Stephen H. Breyer, Circuit
Judge, before the House Judiciary Subconunittee on Criminal Justice, July 23, 1987 ("short, but definite terms of confinement
will help deter such crimes as tax evasion, price fixing and
insider trading").
601
Mr. Boesky's cooperation and the extreme publicity surrounding his case assure that he will be subject to Central
[Footnote continued next page]
- 48 -
Ivan Boesky has exhausted his capacity to make monetary
restitution.
He has forfeited virtually all of his wealth.
What
little remains will be drained away by litigation and additional
taxes now due or anticipated.
Further restitution is possible
only through public service, such as the program for community
service contained in the material on alternative service subm-i-t:-t-ed-w i t h this Memo rand urn .
While the nature of Ivan Boesky's crimes and the extent
of his cooperation distinguish this case, there is nevertheless a
powerful trend toward consistency and uniformity in sentencing.
As the attached chart demonstrates, the overwhelming majority of
persons convicted of insider trading receive probation or split
sentences.
See Exhibit 36.
Similarly, the overwhelming majority
of persons convicted of false filings with Government agencies
receive probation or split sentences.
Dennis Levine, who used offshore accounts to avoid
detection and taxes, who engaged in perjury and· obstruction of
justice until after he was arrested, who denied guilt, took the
Fifth Amendment, and fought until conviction was inevitable, who
[Footnote continued from preceding page]
Inmate Monitoring ("CIM") upon entry into the federal prison system. Experience establishes that inmates subject to CIM are routinely denied admission to half-way houses and furlough programs,
for which they would otherwise qualify, and to which most other
qualified inmates are admitted.
- 49 -
pleaded
gui~ty
to perjury,' obstruction of justice, tax evasion
and securities fraud, and who by any measure was entitled to less
credit for cooperation than Ivan Boesky, was sentenced by Judge
Goettel to two years in prison.
Israel Grossman, an attorney who
was convicted after a lengthy jury trial on 38 counts of insider
trading for the benefit of people who fled the jurisdiction to
avoid prosecution and restitution, was sentenced by Judge Owen to
two years in prison.
If Boesky were to be sentenced as harshly as Grossman
and Levine, lawyers advising potential defendants in future
insider trading and financial accommodation cases will find it
difficult to recommend and justify cooperation with Government
investigations.
Wrongdoers with the reSources to resist Govern-
ment investigations will have little incentive to cooperate.
Such a result would impede investigation and prosecution of these
types of fihancial crimes which are exceedingly difficult to
detect and prove without the cooperation of a knowledgeable participant.
Ivan Boesky is keenly aware that he has limited time
and a long uphill struggle to redeem himself.
He asks only for
- 50 the Court's_compassion in helping him begin the long climb as
soon as the Court's responsibility and conscience allow.
Respectfully submitted,
Leon Silverman
Fried, Frank, Harris,
Shriver & Jacobson
One New York Plaza._
New York, New York 10004
(212) 820-8080
Robert B. McCaw
Wilmer, Cutler & Pickering
2445 M Street, N.W.
washington, D.C.
20037-1420
(202) 663-6000
Attorneys for Ivan F. Boesky
November 30, 1987